Digitalization challenging institutional logics: Top executive sensemaking of service business change

Abstract

Purpose

The purpose of this paper is to explore the mental models of top executive team members in a selected retail bank. The focus is on how each executive team member makes sense of the market situation and changes with regard to customers and customer-bank interactions in the current situation where earlier bank practices are at risk of becoming obsolete.

Design/methodology/approach

All members in the executive team were interviewed individually in August 2014 on how they reason about challenges in the service business. The study uses an abductive research approach.

Findings

The mental models were largely dominated by internal bank issues, and adjusting the services to changing customer preferences was considered a main challenge. The research analysis showed that the executive team members identified the same business challenges, but their interpretations of the meanings and implications of the challenges were different. Mental models tend to be hidden and stable and are seldom explicitly elaborated. There was a distinct spread in mental models in terms of content. Limited focus was on customers as the starting point for business development and renewal.

Research limitations/implications

The study was conducted in the retail banking setting, which is currently affected by many changes. The study, however, was limited to executive members in one bank.

Practical implications

The foremost implications of this study relate to sensitising executive members and teams to their mental models and exposing different core challenges related to customers and customer relationships in the retail banking sector.

Originality/value

The value of the study is it sheds light on top executives’ prospective sensemaking of current business challenges by addressing individual mental models. The study represents a novel approach in the strategic service management literature.

Citation

Holmlund, M., Strandvik, T. and Lähteenmäki, I. (2017), "Digitalization challenging institutional logics: Top executive sensemaking of service business change", Journal of Service Theory and Practice, Vol. 27 No. 1, pp. 219-236. https://doi.org/10.1108/JSTP-12-2015-0256